In most aspects of life we are told that we should be learning from our mistakes and foreign exchange rate trading is not different. However, when you look at foreign exchange rate trading you are also bale to learn from the mistakes that others have made. When you look at the mistakes that many new traders make you will be able to avoid them and be the better trader. Of course, there are times when you will not be able to completely avoid the mistakes and you have to accept this and learn.
Not Being Ambitious Enough With Their Trading
Caution is a great virtue to have when it comes to trading but there is a limit. Some traders place very tight orders which only make them a small profit. While doing this consistently will make you money there are times when you need to loosen the strings a little. That does not mean you should be taken major risks as this will definitely lead to losses. If you have done your research correctly you should be able to include a few larger orders with your smaller ones.
Thinking Foreign Exchange Rate Trading Must be Done Alone
Forex trading does not have to be a solitary action. There are communities of traders on the internet just waiting to share their knowledge and experience with you. Not taking the help available is a big mistake that a lot of trader make. Forex trading forums are made up not only of individuals who want to share information but market leaders and experts as well. Seeking advice from these sources is not a sign of weakness and can help in the long run as you receive knowledge from more than one source.
Using Too Much Caution
While it is important that you not be too reckless when trading foreign exchange you must not be too cautious either. The forex market fluctuates and setting your stop losses too tight can actually cause you to lose more than you make. By loosening the reign you have on the stop losses you allow the trade a chance to swing, which it possibly could do.
Simply Following the Crowd
When you start out you need to decide on a trading strategy and two options are going with the majority and going against. Most traders will go with the majority as it seems to be the safer bet. However, if you understand what you are doing going against the majority can pay bigger rewards. If you decide to trade against the crowd you need to be sure you have done the proper research. Playing against the majority can lead to a loss if you have not researched or if you do not know what you are doing.
Not Understanding What You Are Doing
One of the most important tools of a forex trader is their trading platform. It is imperative that you understand how this platform works and know how to use it properly. Many new traders do not take the time to learn their platform which leads to them making errors with orders or completely missing their opportunity because they did not know what to do. Using a demo account before live trading is recommended as you are able to learn all the ins and outs of the system.